Tuesday, 19 February 2013 10:54

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Investors head into a shortened trading week, hoping a fresh batch of data on housing and manufacturing will provide clues on how the American economy is holding up.

Several key statistics on the housing market will be released throughout the week, including the National Association of Home Builders Housing Market index, housing starts, building permits and existing home sales.

In recent months, the housing market has been propped up by record low mortgage rates, lower unemployment and a rebound in home prices. These conditions are bringing in home buyers who had been waiting for house prices to hit bottom before resuming their search. Low interest rates and depressed home prices have combined to create one of the most affordable housing markets on record.

U.S. manufacturing will also be in focus.

Over the past year, domestic manufacturing has wavered between barely expanding and contracting largely because demand has been held back by slow economic growth overseas and worries over the effects of the federal budget mess in Washington.

The slowdown has hurt manufacturing jobs, according to the latest report from the Bureau of Labor Statistics.

Reports on producer and consumer prices and leading indicators are due out later this week.

Investors will also get to feel the pulse of the U.S. economy from the Philadelphia Federal Reserve Index due out Thursday, and minutes from last month's Federal Reserve's policy-making meeting, which are due Wednesday.

While the Fed has held rates unchanged at record low levels and said it would continue to purchase $85 billion in Treasuries and mortgage-backed securities each month to support the economy, investors will parse through the minutes for clues to how long the central bank plans to continue the policy.

Friday, 01 February 2013 08:08

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From MoneyNews.com

Congress sent President Barack Obama drama-free legislation on Thursday
raising the debt ceiling, averting a government default and putting off the
next tax-and-spending clash between the White House and Republicans until later
in the year.

The measure cleared the Senate on a vote of 64-34 after winning House approval
late last week. It permits the Treasury to borrow above the current $16.4
trillion debt limit through May 18. The White House has said Obama will sign
it.

"Failure to pass this bill will set off an unpredictable financial panic
that would plunge not only the United States but much of the world back into
recession," Sen. Max Baucus, D-Mont., said before the vote. "Every
single American would feel the economic impact."

But Republican leader Mitch McConnell said in remarks on the Senate floor that
"government spending is completely out of control - and it's projected to
get much worse in years to come." His office issued a statement shortly
after the vote saying he had opposed the legislation after Democrats torpedoed
several GOP attempts to rein in spending before final passage.

The legislation reflects a switch in strategy by Republicans, whose insistence
on deep spending cuts as a trade-off for a higher debt limit more than a year
ago pushed the government to the brink of an unprecedented default. With polls
showing their public support lagging, they now look ahead to a new season of
potential showdowns, with a reshuffled batting order that moves the threat of a
default to the back of a line that includes March 1 across-the-board spending
cuts and the March 27 expiration of funding for most federal agencies.

The debt limit measure came with only one string attached by House Republicans,
a provision that would temporarily withhold the pay of lawmakers in either
house that failed to produce a budget this year.

That was designed as a prod to the Senate, where majority Democrats have failed
to bring a budget to a vote in any of the past three years. This year, they say
they will. Republicans say they are eager for a comparison of plans, rather
than a long year spent defending one of their own.

Already, the next conflict over budget priorities is taking shape, in an
environment includes a fresh report that the economy unexpectedly declined in
the last quarter, and the emergence of a warning from the Pentagon's top
uniformed officers that pending defense cuts could lead to a "hollow
force."

Without changes, "we will have to ground aircraft, return ships to port,
and stop driving combat vehicles in training," members of the Joint Chiefs
of Staff wrote congressional leaders in a letter dated Jan. 14.

Obama and Democrats say they are prepared for further deficit reduction
compromise, although they stress they want increased tax revenue as part of any
deal.

Republicans want spending cuts only, after reluctantly swallowing $600 billion
in higher taxes as part of a "fiscal cliff" compromise late last
year.

To further their goals, House Republicans intend to produce a budget that
balances in a decade, and are expected to vote as early as next week to demand
Obama do the same.

Obama's budget is due to be made public later this month, although there is no
expectation it will eliminate red ink in the next 10 years. Nor are majority
Democrats in the Senate expected to do so either.

In the meantime, though, they are likely to propose legislation in the next few
weeks to replace the looming across-the-board cuts with a series of targeted
reductions and higher taxes.

In all, 50 Democrats, 12 Republicans and two independents voted in favor of the
debt limit bill, while 33 Republicans and Democratic Sen. Joe Manchin of West
Virginia opposed it.

In the run-up to the final vote, a proposal by Republican Sen. Rob Portman of
Ohio to require dollar-for-dollar spending cuts on any future debt limit
increases was cast aside, 54-44.

"America must pay its bills — no one is arguing against that point,"
Portman said in a statement issued after the bill's passage. "What we are
debating is how to shrink those bills moving forward so the federal government
doesn't continue maxing out its credit card and selling out future
generations."

Also blocked was an attempt by the Ohio Republican, who served as budget
director under President George W. Bush, to guarantee that the government stay
open — at reduced spending levels — even if funding expires in the future. The
vote was 52-46.

Sen. Pat Toomey of Pennsylvania authored a proposal to give priority to payment
of principal and interest on the debt, Social Security benefits and military
pay in the event the debt limit is reached in the future. It failed on a wider,
bipartisan vote of 79-19.